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A Summary of

How marketplaces win

Lenny Rachitsky
Lenny's Newsletter
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The Demand Side

  • Option 1: Convenience
    • Deliver a significantly more convenient experience
    • Aggregate previously disaggregated supply
    • Make it much easier for customers to trust and transact
  • Option 2: Price
    • Deliver a significantly cheaper product
    • Very few marketplace win by this route
  • Option 3: Unlocking desirable supply
    • Find untapped "supply" that people didn't know they wanted
  • Other routes exist, like making the experience of ordering food and buying collectibles, respectively, simply more fun

The Supply Side

  • The value on the supply side: Money!
  • People-as-supply value prop
    • An income opportunity doing a new type of work that isn't that hard
    • Goal: Make the money feel real and achievable
    • Example: Airbnb hosts, Outschool teachers, Cameo celebs
  • Businesses-as-supply value prop
    • Drive (or save) some percentage of additional revenue for the existing business
    • Goal: Be clear about the economics and make the investment for an SMB feel worth it
    • Example: DoorDash
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